I was recently going through some old files and notebooks and came across a paper I wrote during my sophomore year in college (Spring 1980). The paper was for a course on the history of technology that I titled, Conditions of Technology Development. The professor, who happened to be the Assistant Dean of the College of Engineering, gave me a B+ with the comment of “Some good thoughts – well expressed.” Little did I know what path my career was going to take and how the subject of this paper was going to become the foundation for everything I do including the subject for my book.
The paper took a fairly simple view of what is needed to create the right conditions for technology development that leads to innovation. The conditions I identified included; the role of agricultural productivity to free up land and human resources, the role of low cost mass production to meet the desires of the customers and the availability of the raw resources. The paper also brought up concerns about the need for environmental restraint.
Given the perspective I gained from the 31 years since I wrote this paper, my view of what’s needed to create the right conditions for innovation has changed.
Conditions of Technology Development
If I were to write the paper today, I would say that the following are the conditions of technology development:
1) Effective protection of intellectual property
Without an effective intellectual property policy, there is little to no incentive to invent. It’s through the guaranteed protection that rewards the risks taken to discover and commercialize breakthroughs.
2) Vigorous competition
Highly competitive markets fuel the speed of innovation. In markets where near monopoly conditions exist, innovation slows to a crawl as the company has no outside force challenging its leadership position.
3) Stable economic environment that is pro-business
The willingness of organizations to invest in the development of innovations is tied to the economic return they will receive. Therefore stable economic environments (e.g. low inflation, growing GDP, predictable non-burdensome tax regulation, etc) allow for organizations to plan and commit to the long investment cycles needed for breakthrough innovations.
4) Availability of risk capital
Whether it’s from within an organization or from venture capitalists, risk capital is a fundamental requirement for innovation. Without it, the idea dies before it even has a chance.
5) A strong research and development infrastructure
Research and development infrastructure is established when the government, universities and industries achieve a high level of alignment, support and cooperation. To achieve this level of support, incentives and rewards need to be in place to encourage the right behaviors.
6) Transparent regulatory systems
The regulatory systems need to be open and free from biases. The lack of a transparent regulatory system discourages organizations from developing new innovations since the ability to secure the reward is blocked by others who use influence to prevent a truly competitive marketplace for ideas.
7) Ethics and the rule of law
When some of the conditions are non-existent, innovation can still flourish where there is a moral and ethical structure in place. The core is a legal and judicial system that ensures uniform application of the law to all parties.
8) A strong emphasis on education
The engine that makes innovation happen is our ability to apply human ingenuity to the problems and opportunities that emerge. The education system is critical to nurturing human ingenuity by establishing a foundation of critical and creative thinking skills.
What conditions do you think are critical to innovation?